Court temporarily stops winding up of Jomayi
The Former Jomayi Property Consultants headquarters in Old Kampala. Court says Jomayi has triable issues in its appeal against an order allowing NC Bank to wind up its operations. Photo / File
What you need to know:
- Court says that NC Bank cannot liquidate Jomayi Property Consultant's assets before disposal of an appeal lodged in the Court of Appeal
The Court of Appeal has temporarily stopped the winding up of real estate company, Jomayi Property Consultants.
Sitting as a single judge, Justice Christopher Gashirabake, held that since there is an appeal challenging the High Court decision to wind up the real estate company, if the stay is not granted, the appeal would be rendered nugatory (useless).
“Since the applicant is exercising its unrestricted right of appeal and meets the conditions for the grant of stay of execution, it is the duty of this court to ensure that their appeal, if successful, is not rendered nugatory,” Justice Gashirabake noted, granting the application, in which, Jomayi had sought to stay its winding up pending outcome of the appeal.
In his analysis, Justice Gashirabake also noted that Jomayi was at the threat of being wound up by NC Bank since there was consideration for a liquidator for the same exercise, which would make the company suffer irreparable loss.
“Winding up has other implications that go beyond financial compensation. I, therefore, find that the applicant (Jomayi) has demonstrated that it would suffer irreparable loss,” he said in a ruling that resulted from an application, in which Jomayi sought to stop NC Bank from winding up its operations.
Acting through Anthony Bazira, Jomayi had argued that whereas NC Bank was on the verge of winding up its operation, there was a pending appeal challenging the same decision.
However, NC Bank argued that Jomayi did not satisfy the common law rules applicable to a stay of winding up orders, given that the company was already insolvent and it was, therefore, not in the interest of creditors or the public “to allow an insolvent company to continue trading”.
“The applicant has not adduced any evidence to prove his solvency or ability to pay its debts … the stay, for all intents and purposes, will end the winding-up process … court must protect the interest of the general body of creditors,” NC Bank argued, through its lawyer, William Kasozi, who also noted that Jomayi had not demonstrated that it would suffer irreparable damage given that it was already in an insolvent position.
However, in his analysis, Justice Gashirabake noted that Jomayi’s existence was under threat, yet in documents submitted before court he had found that the memorandum of appeal raised triable issues that had a likelihood of succeeding.
“ … a perusal of the memorandum of appeal raises a triable issue concerning insolvency orders issued by the trial court … I find that the applicant has demonstrated that it would suffer irreparable loss” he noted.
In April, court granted NC Bank’s application to wind up Jomayi, after which the bank sought to appoint a liquidator to commence the process.
The application resulted from a dispute in which Jomayi, in 2020, sued NC Bank, seeking an extension to set aside the bank’s January 23, 2020 statutory demand, resulting from the failure to pay a Shs868m debt.
However, before the trial court could dispose of the case, NC Bank filed a company cause, in which it sought various orders, including winding up Jomayi and appointing a liquidator to oversee its assets.
Court ruled in favour of NC Bank, granting its prayers to windup and eventual liquidation.
However, being dissatisfied with the decision of the High Court, Jomayi appealed in the Court of Appeal, which case is yet to be disposed of.
